Join our community of smart investors

Bargain shares: Targeting multiple undervalued micro-cap value plays

A fund manager that holds a concentrated portfolio of 13 small and micro-cap value investee companies is delivering eye-catching returns this year and looks well set to continue doing so.
Bargain shares: Targeting multiple undervalued micro-cap value plays
  • Net asset value soars 20 per cent to 96.7p since early February.
  • Partial redemption of Real Good Food loan notes releases cash for new investments.
  • Company books hefty gain on Tactus investment in only four months.

Downing Strategic Micro-Cap Investment Trust (DSM:79.5p) is delivering the investment performance I hoped for when I recommended buying the shares, at 65p, in my 2021 Bargain Shares Portfolio. Net asset value (NAV) per share has increased by 9 per cent to 96.7p since the end of July, and is now 20 per cent higher than when I launched my portfolio in early February. At the time, I noted that Downing’s £50m investment includes several value small-caps on my active watchlist. They have been performing well.

For instance, around 7 per cent of the portfolio is held in Hargreaves Services (HSP:557p), a diversified industrial services group and brownfield land developer that is reaping the upside from a strategic transformation over the past four years. I initiated coverage on Hargreaves in a lengthy Alpha Report, at 206p (‘A high yielder offering significant hidden value’, 19 March 2020). The company’s share price was trading at 270p in February 2021 and has since doubled, and should rise materially above 600p in the event of a disposal of HRMS, the group’s German metals trading subsidiary.

To continue reading...
Join our Community of Smart Investors
  • Independent full-length company analysis
  • Actionable investment ideas and recommendations
  • Expert investment tools and data
  • Stock screens from Algy Hall
Have an account? Sign in